German government bonds are opening mixed Wednesday, with the short-dated Schatz outperforming ahead of the European Central Bank governing council meeting later this session. The ECB meeting – held one day earlier given Corpus Christi holiday on Thursday, with speculation that the ECB will take additional non-standard easing measures. However, the measures remain a subject of controversy on the Governing Council and there is no consensus for additional steps. “If the ECB does act, it will first want to see concrete evidence of commitment by EMU leaders to greater financial integration – especially on banking supervision and recapitalization – that will reassure markets”, said the sources story. Overall, most in the market expect ECB President Mario Draghi to deliver a dovish message at the press conference and leave the door open for further easing in coming months, if needs be. In addition, the ECB staff forecast are also expected to be dovish, with growth likely to see a downward revision and a moderate downward revision of this year’s inflation forecast.
EasyForexNews Research Team